Local wireless broadband providers can learn from Vodafone NZ
The new rate of R 183-00 for 1 Gigabyte of data is a significant reduction from the previous price of R 557-00 for the same package. Users who sign a 24 month contract will receive the data card, worth around R 1500-00, free of charge.
Vodafone’s head of business products, business marketing in New Zealand, Jeremy Foster knows what it takes to compete head on with Telecom’s fixed-line plans. “We want to challenge the DSL (digital subscriber line) market, and we realise we have to offer a service which is fast and value for money,” Foster said.
In South Africa the cost for 1 GB of data on the current 3G/HSDPA services from both Vodacom and MTN is R 499-00 per month.
Vodacom has indicated that they will revisit the issue of pricing in the near future, but when it will be done and by how much they will reduce the current prices are not clear.
Local mobile operators will be well advised to follow Vodafone NZ’s example. In South Africa the cost of ADSL is far higher than in New Zealand and the speeds and offerings far inferior. This means that a similar price reduction to the one in New Zealand from either of the SA cellular giants will mean that they will easily capture a significant chunk of the broadband market.
But Telkom, MTN and Vodacom are not the only players in this space.
Sentech and iBurst are also fighting for market share in South Africa’s major cities where they have coverage, and if they can supply users with a truly low cost broadband service their market share will certainly rise significantly.
Both these companies recently launched their low-end products, MyWireless Flexi and iBurst i-Go, but the usage restrictions are simply too severe for these products to be taken seriously as broadband offerings.
An option to connect to the Net for below R 200-00 per month with an allowance of 1 GB or more per month will be an attractive service to any low-capacity broadband user. It is surprising that not one of the companies have decided to launch such a service yet.
An aggressive move of this nature is what is required to attract a large portion of the population and make it feasible for people to migrate from dial-up to this new service. Unlike many international broadband providers who jump to be first with price reductions to convince customers to move to them, local companies seem to be waiting for somebody else to take the lead.
The current pricing structures are a clear indication that such a package is feasible. Unfortunately the wireless broadband providers seem to follow Telkom’s lead regarding broadband pricing, something for which they may pay dearly in future.
If a sub R 200-00 a month 1 GB HSDPA offering from MTN or Vodacom see the light anytime soon, the question will quickly change from ‘How can the mobile broadband compete with ADSL’ to ‘How can ADSL compete with the mobile providers’.
But the current trend seems to be for broadband operators to allow Telkom to dictate market policies. This entails waiting for the numbers before reducing prices.
Smart international telecoms operators have woken up to the fact that you need heavy initial investment to capture market share and then the profits will start to roll in.
South African telecoms companies seem to lack the vision and drive to tackle the incumbent on broadband price, but whilst they sit on the sideline debating tactics without real action they will always remain in Telkom’s broadband shadow.
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